Beer Companies Look to Expand Premium Brew Reach

Proclaiming Miller Genuine Draft as "Beer. Grown Up," Miller Brewing is repositioning the brand to woo sophisticated 20-somethings — a segment that's straying from domestic brews in favor of light beer, imports, spirits and wine.

From helping launch a fashion designer on the Sundance Channel to partnering with GQ magazine, Miller's second-largest premium brand is being targeted to drinkers who are in their mid-to-late 20s who have grown out of the party scene, might be making more money and now want the better things in life.

With beer sales falling flat across the industry, brewers are diversifying their reach, especially those in the domestic premium market. Light beer now takes about 49 percent of the market and is considered the standard beer, according to the trade newsletter Beer Marketer's Insights. So domestic premium brands like Miller Genuine Draft, Budweiser and Coors Banquet are trying to grow their roughly 16 percent stake in a stagnant market, according to a study in a recent issue of the newsletter.

Coors Brewing Co. is also changing the way it talks to consumers about its premium beer, Coors Banquet, said Kabira Hatland, a spokeswoman for the Golden, Colo.-based brewer, a unit of Molson Coors (TAP). New ads will focus on how the beer differs from others in the category, highlighting its use of water from the Rocky Mountains, she said. The last ad campaign centered on men going out on the town, she said.

"What we are finding in a category like domestic premium beer, is it's important to differentiate yourself from the other beers so that when a consumer sits down at a bar he or she understands why he wants to order your beer compared to other ones," Hatland said.

Domestic premium sales have dropped 22 percent since 2000 and 7 percent from 2004 to last year, said Benj Steinman, publisher of Beer Marketer's Insights. Imports have a 12 percent share and craft beer is at 3.5 percent, so domestic premium is still larger than those. But it's been losing ground, he said.

The key this year will be whether light beer continues to grow or domestic brewers step up to regain lost drinkers, he said, though it's not clear how much success Miller will have with its new branding effort.

Miller, a unit of SAB Miller PLC, has launched its "mainstream sophistication" campaign to make Miller Genuine Draft appeal to a wider audience. This summer, the company is sponsoring events with GQ magazine and a show on the Sundance Channel about British fashion designer Ozwald Boateng's introduction to America.

Gone are the days of chugging beer and sitting in inflatable chairs, at least for Miller Genuine Draft drinkers, said Terry Haley, brand manager of Miller Genuine Draft. The brewery — the country's second-largest behind Anheuser-Busch Cos. Inc. (BUD) in St. Louis — believes beer can appeal to a broader audience.

"No one sees themselves as the old beer stereotype anymore," Haley said.

Its surveys show the Miller Genuine Draft line appeals to men and women who know how to cook, and want to own homes and entertain friends, not just go out for fun on the town, he said. These drinkers care more about flavor than they do about calories, meaning they won't automatically reach for a light beer, he said.

"We're pulling out every stop to make sure that we will create reconsideration in consumers' minds quickly and consistently," Haley said.

Ads on the air in 13 major markets feature 20-something men stepping over a red line, crossing into the next stage in their lives, whether it be getting married, buying a home or choosing to eat sirloin steaks rather than chuck roast. The brand even sponsored the Academy Awards this year, a far cry from traditional sports-dominated advertising for beer.

Miller originally intended to market Miller Genuine Draft for older crowds, but the brand got lumped in with Miller Lite years ago and is just now being seen on its own, Haley said.

Both Miller Genuine Draft and Anheuser-Busch's Budweiser, are at about half their peak sales volume, which for Budweiser was in the late 1980s and in the early 1990s for Miller Genuine Draft.

"It's a difficult segment of beer in which to compete these days," Steinman said.

Anheuser-Busch Cos. does not feel that Budweiser, the world's second-best selling beer, behind Bud Light, needs to be rebranded, said Randall Blackford, director of Budweiser Marketing. The company relies on sponsorship of events such as the Olympics and golf's Ryder Cup to enforce its heritage as an iconic American classic, he said.

But even its new ads, which feature the brand's signature crown appearing everywhere from in a man's hair to oil in a frying pan, are geared at this more affluent, mid-20s to early 30s age group, said Christy Brinnehl, a beverage analyst for Mintel Custom Solutions, based in Chicago.

She said brewers should be successful marketing their full-calorie, domestic premium brands to a segment that may not care as much about calories. Food companies are now telling people it's fine to indulge as long as it's within reason, and beer companies should do the same, she said.

"We're seeing a lot of this portion control, you can eat whatever you want as long as you eat in moderation," Brinnehl said. "I think they're saying you can do that with beer. It's more indulgent. There's more of a premium feel to it."